But get the paperwork first.When I went to one of my closings, the attorney insisted on a board resolution the unit was a rental.

If the living room carpet costs $600 total for replacement, they would pay $480 whereas if they kept the flooring, they would owe nothing since the useful life of that carpet is long gone.If they insist or if you decide to move forward with replacement, have them sign a new lease with whatever terms you wish to offer and raise the rent to market rate. 

If she is not out I would insist on payment n cash.

Give them the signed lease and they will likely pay.I would probably insist they sign a new lease and only offer a M2M and see where it goes.

Also, I feel it important to mention that I wasn't going to offer him after I viewed the property, but he insisted that I did, no matter how "low ball" the offer was.

folks coming to that area from out of town insist on one often, although us locals are a bit more understanding.  

As a duplex, they should (imo) allow one existing  tenant and insist on your occupancy.

He insisted it was not profitable.

I know I would stay away unless a client INSISTED to see your house even if you were .5% above the co-op norm.  

I would also insist that the current occupant be out of the property.